Out-of-state Forum Selection Clauses May Not be Enforceable with Respect to California Wage and Hour Claims

SAMSON ELSBERND BIO BIG By Samson R. Elsbernd, Esq.

Employment agreements commonly include a provision designating the place or forum where any employment related-claims must be litigated.  Ordinarily, the party opposing a forum selection clause has the burden to demonstrate that the clause should not be enforced.  However, the burden is reversed when the underlying claims are statutory rights that may not be waived, such as California Labor Code provisions concerning employee compensation.  In such cases, the party seeking to enforce the forum selection clause must demonstrate that the forum selection clause will not diminish the statutory rights; otherwise, the clause will not be enforced.

In Verdugo v. Alliantgroup, L.P., 237 Cal.App.4th 141 (2015), the employer was  headquartered in Harris County, Texas, and had regional offices in other states, including California.  The employer hired an employee to work at its California office, and required her to sign an employment agreement.  The employment agreement included a forum selection clause designating Harris County, Texas as the forum for litigation.  The employee filed a lawsuit in California based on various provisions of the California Labor Code concerning proper pay, meal and rest breaks, and wage statements that the Legislature declared cannot be waived by private agreement.  The employer moved to stay the action based on the forum selection clause.  The employer did not demonstrate that Texas would have applied California law, or, that Texas provided the same or greater rights as California.  As a result, the California court of appeal did not stay the action and the lawsuit continued in California.

Employers with California employees should review their forum selection clauses because forum selection clauses that violate California’s public policy on employee compensation will not be enforced.  Employers desiring to litigate employment related claims outside California should determine the likelihood that the clauses will be enforced.  Provisions designating California law as the applicable law (choice of law provision) may make it more likely that the forum selection clause will be enforced, provided that the forum state would enforce the provision and apply California law.  Or, employers may just need to consider alternative forums for claims by their California employees.


Generally, prevailing parties in civil litigation are entitled to an award of their litigation costs.  Not necessarily so with respect to claims under the Fair Employment and Housing Act, or FEHA.  In FEHA cases, the California Supreme Court recently ruled that prevailing employees should ordinarily receive their costs (and attorney fees), but prevailing employers should not be awarded costs (or attorney fees) unless “the action was objectively without foundation when brought, or the [employee] continued to litigate after it clearly became so.”  Williams v. Chino Valley Independent Fire Dist., 61 Cal.4th 97, 115 (2015).